New Study: Concrete Cheaper Than Wood in Building Insurance Costs in Edgewater, New Jersey

Findings suggest differential to grow over the next few years, as concerns with fire in wood-framed buildings increase.

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A new study by Dr. Pieter VanderWerf and Nicholas Haidari of Boston College entitled “Survey of Insurance Costs for Multifamily Buildings Constructed with Wood-frame and Concrete” found building insurance rates will be lower for midrise apartment buildings constructed with concrete instead of wood‐frame. This result appears to hold for both builder’s risk and commercial property insurance and across a wide range of regions of the United States.

The objective of the study, underwritten by the National Ready Mixed Concrete Association (NRMCA), was to collect insurance premium quotes for builder’s risk insurance (during construction) and commercial property insurance (during occupancy) for a reference building built using combustible construction (wood‐frame) and non‐combustible construction (concrete). The five reference cities include Edgewater, NJ; Towson, MD; Orlando, FL; Dallas, TX; and Los Angeles, CA.

In Edgewater, New Jersey, the results found, on average, builder’s risk insurance savings of 66.5 percent and commercial property insurance savings of 57.7 percent.

“This study validates what has long been the assumption when it comes to the hidden costs of certain types of buildings,” says Kevin Lawlor, a spokesperson for Build with Strength, a coalition of the NRMCA consisting of fire service professionals, engineers, architects, and industry experts committed to stronger building codes. “At a time when multifamily residential building fires are a seemingly common occurrence, concrete’s durability in the face of such threats has resulted in a marked difference in terms of insurance costs.”

Over the last several months, there have been a number of fires in multifamily, residential complexes constructed from wood – most notably in Lakewood, NJ; Weymouth, MA; Haverhill, MA; Waltham, MA; Charlotte, NC; Warner Robins, GA;  Midvale, UT; Oakland, CA; Dorchester, MA; Lawrence, MA; East Hollywood, CA; Lowell, MA; Waterbury, CT, Emeryville, CA; St. Petersburg, FL; Arlington, VA; College Park, MD; Overland Park, KS; Raleigh, NC; and Maplewood, NJ. There have been dozens over the last few years.

“Concrete buildings cost less to insure because they’re not going to combust, and they’re less prone to degradation over the lifespan of the structure,” continues Lawlor. “It’s only logical that insurance rates would reflect that durability.”

While the extent of the insurance savings for a concrete building varied widely for builder’s risk insurance quotes, it was within the range of 22‐72% for all regions. For commercial property insurance, the quoted savings were within the range of 14‐65%.

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